Cynthia Hannah-White
Attorney and Counselor at Law
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NEWS FLASH * * NEWS FLASH * * NEWS FLASH
FREE ESTATE PLANNING SEMINARS!
- Saturday, January 9, 2010, 10 a.m. to noon, Lihue Public Library (multi-purpose room)
- Saturday, January 23, 2010, 10 a.m. to noon, Sheraton Kauai Resort, Poipu (Lawai Room)
Find out a few simple steps you can take right away to make things easier for your loved ones if tragedy strikes, and learn about recent changes in the law. Do you know that even if you already have a trust, it may not operate as planned if you die in 2010 (or later)? Attorney Cynthia Hannah-White of Kauai Estate Law, LLLC will answer your questions about basic estate planning, including wills, trusts, powers of attorney and healthcare documents. The second hour will focus on more advanced topics, including asset protection, long-term care planning, and retirement benefits. Reservations are NOT required. For more information, contact Kauai Estate Law, LLLC at 245-9991.
Estate Tax Legislation UPDATE
No new estate tax legislation was passed before the end of 2009. What does this mean? Well, for starters, there is now NO ESTATE TAX for individuals dying in 2010. The 'stepped-up' basis rules have been changed; there is no longer an automatic 'step-up' in basis for all assets received from a decedent. If you have estate planning documents, such as a will or a revocable living trust, you SHOULD have them reviewed by an estate planning attorney, to be sure that they will operate as intended now that the law has changed.
In addition to these massive changes for 2010, in 2011 (if Congress doesn't act) the estate tax will come back, but the exemption will be re-set to the $1 million level. Even if your estate is not near the $3.5 million taxable threshold that was in place in 2009, it could very well be taxable in 2011 and beyond.
Congress MAY act in the next few months to reinstate the estate tax, and may attempt to make it retroactive to January 1, 2010. Such a retroactive change has been approved by the Supreme Court on one prior occasion (to close a loophole), but there will, at the very least, be a long period of uncertainty, and perhaps a legal challenge, before it will be clear that any such law is valid.
If Congress acts, what is it likely to do? Well, on December 3, 2009 the House passed a bill that would extend the $3.5 million estate tax exemption (with no index for inflation), and the current 45% estate tax rate, indefinitely, and would also preserve the “stepped-up basis” rules. The Senate failed to act on that bill or to pass one of its own. Some Republican Senators have pushed for repeal of the estate tax. Nevertheless, Senate Finance Committee Chair Max Baucus (D-MT) and Budget Committee Chair Kent Conrad (D-ND) have gone on record in favor of extending the estate tax. Sen. Baucus favors a permanent extension of the $3.5 million exemption and 45% estate tax rate. Sen. Conrad prefers an extension for two years. Both Senators would offset the cost of the extension with other tax increases. However, other Senators feel there should be a higher estate exemption (e.g., $5 million with indexing for inflation) and lower tax rate (35% has been proposed). The 40 Republican Senators are expected to support this provision. If even one other Senator joins this group, it may be difficult for Congress to pass any estate tax bill with the required 60 votes.
So all we can do is wait and see, and adjust our planning to provide the best results under any possible scenario.
=========================================
Click the links for helpful internet resources/articles dealing with the following topics:
Will and Probate FAQs
Pet trust (a way to provide funds and direction for the care of your pet after your death)
Qualified Personal Residence Trusts (a way to shield future appreciation on your home from estate taxes, minimize the gift tax associated with transferring your home to family members, and possibly shield the asset from creditors)
For Parents of Minor Children (a nice summary of relevant considerations for parents)
NEWS FLASH * * NEWS FLASH * * NEWS FLASH
FREE ESTATE PLANNING SEMINARS!
- Saturday, January 9, 2010, 10 a.m. to noon, Lihue Public Library (multi-purpose room)
- Saturday, January 23, 2010, 10 a.m. to noon, Sheraton Kauai Resort, Poipu (Lawai Room)
Find out a few simple steps you can take right away to make things easier for your loved ones if tragedy strikes, and learn about recent changes in the law. Do you know that even if you already have a trust, it may not operate as planned if you die in 2010 (or later)? Attorney Cynthia Hannah-White of Kauai Estate Law, LLLC will answer your questions about basic estate planning, including wills, trusts, powers of attorney and healthcare documents. The second hour will focus on more advanced topics, including asset protection, long-term care planning, and retirement benefits. Reservations are NOT required. For more information, contact Kauai Estate Law, LLLC at 245-9991.
Estate Tax Legislation UPDATE
No new estate tax legislation was passed before the end of 2009. What does this mean? Well, for starters, there is now NO ESTATE TAX for individuals dying in 2010. The 'stepped-up' basis rules have been changed; there is no longer an automatic 'step-up' in basis for all assets received from a decedent. If you have estate planning documents, such as a will or a revocable living trust, you SHOULD have them reviewed by an estate planning attorney, to be sure that they will operate as intended now that the law has changed.
In addition to these massive changes for 2010, in 2011 (if Congress doesn't act) the estate tax will come back, but the exemption will be re-set to the $1 million level. Even if your estate is not near the $3.5 million taxable threshold that was in place in 2009, it could very well be taxable in 2011 and beyond.
Congress MAY act in the next few months to reinstate the estate tax, and may attempt to make it retroactive to January 1, 2010. Such a retroactive change has been approved by the Supreme Court on one prior occasion (to close a loophole), but there will, at the very least, be a long period of uncertainty, and perhaps a legal challenge, before it will be clear that any such law is valid.
If Congress acts, what is it likely to do? Well, on December 3, 2009 the House passed a bill that would extend the $3.5 million estate tax exemption (with no index for inflation), and the current 45% estate tax rate, indefinitely, and would also preserve the “stepped-up basis” rules. The Senate failed to act on that bill or to pass one of its own. Some Republican Senators have pushed for repeal of the estate tax. Nevertheless, Senate Finance Committee Chair Max Baucus (D-MT) and Budget Committee Chair Kent Conrad (D-ND) have gone on record in favor of extending the estate tax. Sen. Baucus favors a permanent extension of the $3.5 million exemption and 45% estate tax rate. Sen. Conrad prefers an extension for two years. Both Senators would offset the cost of the extension with other tax increases. However, other Senators feel there should be a higher estate exemption (e.g., $5 million with indexing for inflation) and lower tax rate (35% has been proposed). The 40 Republican Senators are expected to support this provision. If even one other Senator joins this group, it may be difficult for Congress to pass any estate tax bill with the required 60 votes.
So all we can do is wait and see, and adjust our planning to provide the best results under any possible scenario.
=========================================
Click the links for helpful internet resources/articles dealing with the following topics:
Will and Probate FAQs
Pet trust (a way to provide funds and direction for the care of your pet after your death)
Qualified Personal Residence Trusts (a way to shield future appreciation on your home from estate taxes, minimize the gift tax associated with transferring your home to family members, and possibly shield the asset from creditors)
For Parents of Minor Children (a nice summary of relevant considerations for parents)
Estate Planning Blogs:
Death and Taxes
You and Yours
Estate Planning Law Blawg
Kauai Blog:
Planet Kaua'i
More coming soon!
Death and Taxes
You and Yours
Estate Planning Law Blawg
Kauai Blog:
Planet Kaua'i
More coming soon!
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Photographs on this page courtesy of Linda Long (l) and Morvan Rodrigues (r).